An FPI must disclose its owners down to natural persons if over half its Indian equity sits in one group or it holds over INR 50,000 crore

A foreign portfolio investor (FPI) that holds more than 50 per cent of its Indian equity assets under management (AUM) in one Indian corporate group, or more than INR 50,000 crore of Indian equity AUM alone or with its investor group, must give its designated depository participant (DDP) the name of every person with any ownership, economic interest or control in it, down to natural persons. The Securities and Exchange Board of India (SEBI) set this out in a circular of 24 August 2023 under regulations 22(6) and 22(7) of the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019, and raised the size limit from INR 25,000 crore on 9 April 2025. An FPI that stays over a limit without disclosing has its registration rendered invalid and 180 days to sell.

What is the rule, and where does it come from?

The source is the Securities and Exchange Board of India (Foreign Portfolio Investors) (Second Amendment) Regulations, 2023, notified on 10 August 2023 as No. SEBI/LAD-NRO/GN/2023/143. They inserted two sub-regulations in regulation 22 of the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019. Regulation 22(6) says that an FPI "that fulfils the criteria specified by the Board from time to time, shall provide information or documents in relation to the persons with any ownership, economic interest or control, in the foreign portfolio investor". Regulation 22(7) leaves the manner of providing it to the Board.

The Regulations set no number. The criteria came in a SEBI circular of 24 August 2023, No. SEBI/HO/AFD/AFD-PoD-2/CIR/P/2023/148, which took effect on 1 November 2023. It was amended on 20 March 2024 and then absorbed into Part C of the Master Circular for Foreign Portfolio Investors of 30 May 2024, No. SEBI/HO/AFD/AFD-PoD-2/P/CIR/P/2024/70. That master circular is still the operative text, as amended by later circulars.

The circular gives its reasons. Some FPIs hold a concentrated part of their Indian equity in one company or group, which raises the possibility that promoters or investors acting in concert are using the FPI route to avoid takeover-code disclosure or minimum public shareholding. And no natural person is often identified as beneficial owner of an FPI, because each investor entity sits under the money-laundering rules' threshold even where one person holds a significant interest through several.

The disclosure is wider than beneficial ownership. It is "granular details of all entities holding any ownership, economic interest, or exercising control in the FPI, on a full look through basis, up to the level of all natural persons, without any threshold".

What are the two triggers?

An FPI must make the disclosure to its DDP, in the format of a standard operating procedure (SOP) that the DDPs and custodians adopted with SEBI, if either of two tests is met.

The first is concentration: more than 50 per cent of the FPI's Indian equity AUM sits in a single Indian corporate group. SEBI has the stock exchanges and depositories publish a repository of the companies in each group so that the test can be run.

The second is size: the FPI "individually, or along with their investor group", holds more than a stated amount of equity AUM in the Indian markets. The investor group is the one in regulation 22(3): FPIs with common ownership of more than fifty per cent or common control, other than an FPI investing only in government securities (the exclusion has applied since 8 February 2026). The amount was INR 25,000 crore in the 2023 circular and the 2024 master circular. SEBI's circular of 9 April 2025, No. SEBI/HO/AFD/AFD-POD-3/P/CIR/2025/52, raised it to INR 50,000 crore with immediate effect, in each place the master circular states it. The 50 per cent concentration test was left alone.

Who is exempt?

Under paragraph 1(xiv) of Part C of the master circular, an FPI that satisfies any of the following need not disclose:

• a government or government-related investor registered under regulation 5(a)(i);
• a public retail fund as defined in regulation 22(4) (open mutual funds and unit trusts, insurers and pension funds), subject to validation by the DDP or custodian;
• an exchange traded fund with less than 50 per cent exposure to India, or an entity listed on a permitted exchange in a permitted jurisdiction;
• a pooled vehicle registered with or regulated by a government or regulator at home, where its holding in an Indian group is below 25 per cent of its global AUM at scheme level (for the concentration test), or its Indian equity AUM is below 50 per cent of its global AUM at scheme level (for the size test), again subject to independent validation;
• an FPI that cannot sell its excess because of a statutory restriction, such as an anchor lock-in or a freeze order, while it lasts;
• a newly registered FPI for the first 90 calendar days from settlement of its first Indian equity trade;
• an FPI winding down that has told its DDP it will surrender its registration, which must reach nil within 180 calendar days, failing which the account is blocked for sales as well as purchases;
• a university fund or university-related endowment, added by the circular of 1 August 2024, if it is a Category I FPI (or eligible to be) with Indian equity AUM below 25 per cent of global AUM, global AUM above INR 10,000 crore equivalent, and tax filings showing it is a tax-exempt non-profit.

Two further rules sit beside the list. Where an investor group exceeds the size limit, the AUM of its exempt FPIs is deducted; if what remains is below the limit the group is out, and if above, only the non-exempt FPIs disclose. And where an entity found in the look through is itself in an exempt class, the look through stops there.

The March 2024 circular added a concentration-test exemption. An FPI is exempt if the group's apex company has no identified promoter, the FPI holds no more than 50 per cent in the group after setting aside its holding in that apex company, and the combined holdings of all FPIs relying on this in the apex company are below 3 per cent of its equity share capital. The depositories track that limit daily.

What are the timelines?

An FPI over a limit can avoid disclosure by coming back under it. For concentration, it has 10 trading days from the day it exceeds 50 per cent, and must make no fresh purchase of any company in that group for the next 30 calendar days. For size, it has 90 calendar days from the day it exceeds the limit, and the accounts of every FPI in the investor group are blocked for further equity purchases until the holding is brought below the limit. If holdings go over again later, the period starts afresh.

An FPI still over a limit when the period ends has 30 trading days from that expiry to disclose to its DDP. The disclosure is material information under regulation 22(1)(c) while the holding stays above the limit, and DDPs report non-disclosing and exempted FPIs to SEBI each quarter.

What follows from non-disclosure?

The master circular, repeating the 2023 circular, is blunt. Non-disclosure "shall render the registration of the FPI invalid and the FPI shall not make any further purchases". The FPI must then sell and exit the Indian securities market by surrendering its registration within 180 calendar days of the day the certificate becomes invalid. During those 180 days the investee companies restrict its voting rights to the lower of its actual shareholding and the shareholding corresponding to 50 per cent of its equity AUM on the day the registration became invalid.

What does this look like for a Mauritius fund?

An illustration. The funds and every figure below are hypothetical. Fund A is a pooled vehicle formed in Mauritius, regulated there by the financial regulator, and registered as an FPI. It has global AUM of INR 40,000 crore, of which INR 8,000 crore is Indian listed equity. Of that, INR 4,400 crore is in shares of one Indian corporate group.

Concentration test, Fund A
  Group holding / Indian equity AUM = 4,400 / 8,000        55 per cent
  Limit                                                    more than 50 per cent
  To get back to 50 per cent by selling the group:
    (4,400 - x) / (8,000 - x) = 0.5, so x = INR 800 crore  within 10 trading days
  Fresh purchases of group companies barred                30 calendar days

Home-regulator exemption for pooled vehicles, Fund A
  Group holding / global AUM = 4,400 / 40,000              11 per cent
  Limit for the exemption                                  below 25 per cent
  Result                                                   no disclosure, if the
                                                           DDP validates the figures

Size test, on separate funds under common control
  Fund C, Indian equity AUM                                INR 30,000 crore
  Fund D, Indian equity AUM                                INR 24,000 crore
  Investor group                                           INR 54,000 crore
  Limit since 9 April 2025                                 INR 50,000 crore
  Reduction needed to fall below the limit                 more than INR 4,000 crore
  Period, and effect on accounts                           90 calendar days; both blocked
                                                           for equity purchases
  If Fund D were an exempt public retail fund              54,000 - 24,000 = 30,000
                                                           so Fund C is out

If Fund A does not disclose after the periods run
  Registration                                             invalid; no purchases
  Exit                                                     within 180 calendar days
  Voting cap, on one reading (50 per cent of Indian
  equity AUM)                                              50 per cent x 8,000 = INR 4,000
                                                           crore across the group, on the
                                                           invalidity date

Two features of the arithmetic matter. A fund exactly at 50 per cent does not trigger, because the text says "more than". And before 9 April 2025 Fund C, at INR 30,000 crore, would have crossed the size limit on its own, without Fund D, which is the case the increase takes out. Fund C and Fund D are assumed not to qualify for the pooled vehicle exemption.

What remains unsettled?

How the voting cap works across holdings. Paragraph 13 of the 2023 circular, now paragraph 1(xxii) of Part C, caps votes at the lower of actual shareholding and the shareholding corresponding to half the FPI's equity AUM. The text does not say whether that is applied company by company or to the portfolio as a whole, and leaves the mechanism to the SOP.

How AUM is valued and on which date. The circulars define neither a valuation basis nor a testing date; both are left to the SOP of the DDPs and custodians.

Which entity is the scheme. The pooled vehicle exemption speaks of a scheme similar to one under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996. A master fund with feeders, or a segregated cell, raises the question of which entity is measured, and the circular leaves it to independent validation by the DDP or custodian.